Dr Paul: "I don't want to go back to the gold standard"

[Bryan]

Stated at 25:30 in the recent Google interview:
http://www.youtube.com/watch?v=yCM_wQy4YVg

He does of course want "hard assets" to back the dollar to not have a fiat currency. Dr. Paul also acknowledges that the Constitution says only gold or silver are legal, presumable he would want to change that.

Just wanted to point this out it doesn't seem clear at times.

[LibertyEagle]

Yeah, I'm a little unclear as to what he wants to do.

[foofighter20x]

I don't get where this whole gold and silver are the only Constitutional forms of money comes from.

It's not correct.

The individual States are limited to only gold and silver, but the Union itself can make whatever it wants into money.

[Bradley in DC]

There have, of course, been several different "gold standards" just in our history. Dr. Paul has explained that he doesn't want to go "back" in time but to harness new technologies, management developments, financial company structurings, etc. for a modern system.

[DeadheadForPaul]

I think it goes along with Dr. Paul's more moderate "transition" philosophy

He stated that he does not want to abolish the FED, for example, just like he does not want to get rid of Social Security all of a sudden. Phasing out is key

This is a very responsible stance because the proper way to approach these things is to fade them out over time. The American people do not want to hear about drastic changes (except with regard to Iraq). I like Dr. Paul's approach to these issue :)

[Bradley in DC]

I think it goes along with Dr. Paul's more moderate "transition" philosophy

He stated that he does not want to abolish the FED, for example, just like he does not want to get rid of Social Security all of a sudden. Phasing out is key

This is a very responsible stance because the proper way to approach these things is to fade them out over time. The American people do not want to hear about drastic changes (except with regard to Iraq). I like Dr. Paul's approach to these issue :)

Yes, we want to abolish the Fed. What is the fastest, most practical way of doing so is open to some debate. The Federal Reserve System is a hybrid government (Board) and private (Reserve bank) system. The Reserve banks do not create credit and offer useful services to their member banks and the financial system. The Board is an empty shell compared to its Bretton Woods days but can still create mischief.

[kimosabi]

The core issue is that the Government or people need to control the money creation process, not a bunch of nasty, corrupt, criminal, power hungry psychopathic International Bankers that lend their "Thin Air" to the government and the people.

[ronpaulitician]

I'll have to read up on this, but I believe Dr. Paul believes there's a flaw in the gold standard system.

[MEBuckeye]

The constituion grants congress the power to coin money and establish a standard of weights together. Its obvious that the origional intent was to have a commodety based monetary system. The founders would not have been interested in weights if they had considered fiat money to be reasonable.

[jonahtrainer]

I don't get where this whole gold and silver are the only Constitutional forms of money comes from.

It's not correct.

The individual States are limited to only gold and silver, but the Union itself can make whatever it wants into money.

'Legal Tender' laws are in place to force a creditor to accept payment against their will from a debtor to extinguish a debt. They are an governmental interference. There is no basis anywhere in the Constitution for the Federal Government to be involved in making Legal Tender laws.

Article 1 Section 10 Clause 1 states "No state shall ... coin money; emit bills of credit; make anything but gold and silver coin a tender in payment of debts"

The Constitution does not say gold and silver must be legal tender only that if anything is made legal tender it must be gold and silver.

The Union has not been delegated the enumerated power to make 'legal tender' which is a property interest. Property is a traditional common law subject reserved to the states. The 10th Amendment reserves all rights not expressly delegated to the Union to the States or to the People. Therefore, legal tender laws are within the state's control and if they make anything legal tender it must be gold and silver. See how it works?

Sure, the Union can 'make money' but it cannot make that money 'legal tender.'

[LibertyEagle]

There have, of course, been several different "gold standards" just in our history. Dr. Paul has explained that he doesn't want to go "back" in time but to harness new technologies, management developments, financial company structurings, etc. for a modern system.

Bradley, can you direct me to something to read that explains his stance a little more?

[Johnnybags]

They are just speeding up the destruction of the middle class process. Hey, what's increasing MS 13 percent if inflation is only two? Oh not real inflation, statistically manipulated inflation. Cowards had to stop showing the M3 data, cash out those savings bonds for the kids, fast. Buy em corn futures for 3.86 a bushel, it'll 6.86 in two more years. Unless China floats its currency up like congress is begging them to, then it wil be faster.

[Original_Intent]

I'll have to read up on this, but I believe Dr. Paul believes there's a flaw in the gold standard system.

The flaw in the gold standard is that the Fed bankers have already bought up the gold thru their counterfeiting scheme. Going to a gold standard would only make the thieves more powerful.

I expect he would back it by something that is fairly rare, like Gold, that the US could get the majority of it to hold as a reserve against the paper money.

[Gee]

Bradley, can you direct me to something to read that explains his stance a little more?
Its more or less just to legalize gold and silver currencies. Currently only FRNs (and I think foreign currencies) are the only things able to be used without taxation (sales, capital gains, etc).

[Bradley in DC]

Bradley, can you direct me to something to read that explains his stance a little more?

Not at my fingertips, no, sorry. In interviews in this campaign he has said as much. In addition, when I visited his office at F.R.E.E. in Texas, he has the minutes of the Gold Commission on his shelf which included Greenspan's testimony on how to re-introduce the gold standard (he pointed that out to me). In short, the government would issue gold-denominated bonds in competition with the FRN-denominated ones (think the TIPS bonds for a comparison). There is the 1980 Greenspan op-ed in the WSJ saying the same thing.

[Silverback]

Part of the problem is that although it's very clear technology is going to make national currencies as we know them unnecessary over the next couple decades it isn't clear exactly how that would work, yet.

Nor is it clear how compromise positions between Ron and congress would shake out.

Look at it this way, it's going to take 30 years to phase out the debt currency and go to treasury notes, along the way I believe Paul wants to gradually reduce the barriers to using alternate means of exchange, starting with gold and silver.

Ultimately we don't want a gold standard.

What we want is a free market for money and credit. If there's no government force propping up any particular means of exchange the most popular, most liquid asset rises to the top and becomes the measuring stick against which values are measured, all by itself, no "standard" required at all.

That's how metals became money in the first place, and it's on that basis that they were permitted as state recognized legal tender by our founders. With instantaneous access to 24 hour global marketplaces for all assets many things are possible that never were before. Ron's a 71 Y/O old school Austrian who advocated gold in the 70s but he sees the potential of the new technologies and the consequences if we allow things to continue to move towards a global debt-currency.

The constitutional question is a bit of a stretch, the truth is it was never settled, but the current monetary system is not compatable with our system of government.

[Wyurm]

I think it goes along with Dr. Paul's more moderate "transition" philosophy

He stated that he does not want to abolish the FED, for example, just like he does not want to get rid of Social Security all of a sudden. Phasing out is key

This is a very responsible stance because the proper way to approach these things is to fade them out over time. The American people do not want to hear about drastic changes (except with regard to Iraq). I like Dr. Paul's approach to these issue :)

Ummm, yes he does want to abolish the Fed, hes even writen and introduced legislation (largely ignored legislation) to do just that. And, thats a very good thing. The Fed is nothing but a criminal empire, a cartel. Now, that said, he's also stated that he would allow private mints to coin money legally. See, right now they can sell bullion, but they can't call it legal tender. Allowing them to call it legal tender would allow it to compete with the Fed. Then he would phase out the Fed. As for whether or not he would be interested in a government controlled fiat currency such as the green-backs, well I doubt it, but you would have to ask him.

The largest problem with fiat currencies and even with asset backed currencies is lending out more than you actually have, a.k.a. frational reserve banking. Its the notion that I have 1 oz. of pure .999 gold, you ask me for a loan of 10 oz. of gold, so I write you a receipt for 10 oz. showing that you have 10 oz. of gold available to you from me. Except I only have 1. Then I charge you 1 oz. interest so you have to pay me back 11 oz. of gold. Now I have 12 oz. of gold made from just 1 oz.. This also applies to fiat currency and is what is really happening when you get a loan from a bank, however, its not gold they are faking. Its just paper. Money contrived from nothing.

Now, I know some videos say asset backed currency are bad and others say fiat is bad etc... Think critically about it. 1) if you take fractional reserve banking out of the equation by making its practice illegal, perhaps even constitutionally illegal, then you lose one of the major drawbacks to asset-backed currency. 2) gold and silver have intrinsic lasting value. 3) Paper does too, however, paper is worth quite alot less than gold and silver, intrinsicly speaking. 4) Some say that there isn't enough gold and silver for everyone - not true, but you would have to see that to believe it which Dr. Paul's method of weening you off paper would allow.

Honestly, why on earth people keep thinking paper is so much better than gold confounds me, but you would have the ability to see it for yourself. The Fed on the other hand has very little to do with the argument of paper or gold. The Fed, no matter what they back the money with, is criminal in nature and should most certainly be stopped. Frational reserve banking, excessive printing, and now not even reporting M3. The dollar will be unacceptable world-wide before you know it. Infact Iran has already rejected it.

[LibertyEagle]

With instantaneous access to 24 hour global marketplaces for all assets many things are possible that never were before. Ron's a 71 Y/O old school Austrian who advocated gold in the 70s but he sees the potential of the new technologies and the consequences if we allow things to continue to move towards a global debt-currency.

If you're saying a world currency, no, I've never ever read anything that Dr. Paul wrote that indicated he supported this type of thing. Did I misunderstand you?

[Wyurm]

Not at my fingertips, no, sorry. In interviews in this campaign he has said as much. In addition, when I visited his office at F.R.E.E. in Texas, he has the minutes of the Gold Commission on his shelf which included Greenspan's testimony on how to re-introduce the gold standard (he pointed that out to me). In short, the government would issue gold-denominated bonds in competition with the FRN-denominated ones (think the TIPS bonds for a comparison). There is the 1980 Greenspan op-ed in the WSJ saying the same thing.

Wait, and I apologize for seeming ignorant of this, but Greenspan actually advocated a return to the gold standard? Or was this before he joined the Fed?

[Misesian]

There have, of course, been several different "gold standards" just in our history. Dr. Paul has explained that he doesn't want to go "back" in time but to harness new technologies, management developments, financial company structurings, etc. for a modern system.

Brad,

Exactly correct. The previous monetary policy that is known as a "gold standard" was not a true gold standard. Silver and gold were also tied I believe instead of silver being allowed to float to represent its true worth on the open market.

What Ron Paul very likely wants is the Gold Standard as advocated by one of his close colleagues being the late great Murray Rothbard. The Rothbardian Gold standard is a pure 100% gold dollar, or private currencies even which he so eloquently illustrates inevitably lead towards gold anyways.

He has a number of very good books I'd recommend reading on this topic that you can buy from: http://www.mises.org/store/Rothbard-Collection-C18.aspx

The Case Against the Fed, and The Case for the 100% Gold Dollar are two in particular I'd recommend.

[Silverback]

If you're saying a world currency, no, I've never ever read anything that Dr. Paul wrote that indicated he supported this type of thing. Did I misunderstand you?

Yes, you did misunderstand me.

All I'm saying is that the status quo isn't going to hold up, we either need to work towards a free market for money and credit (as Paul advocates) or watch as the globalists move us into a monetary block like the EU with another debt-based currency when our current system fails.

[austin356]

I'll have to read up on this, but I believe Dr. Paul believes there's a flaw in the gold standard system.



He believes there as a flaw in what used to be the Gold Standard (even Pre 1910s GS).

The largest of those problems where:

1) It had Fractional Reserve Banking which was inflationary and did not fully mix with the Gold Standard.

2) At many points in time there was a bi-metal standard. This was a fundamental flaw because there is no way to set the ratio of two products to each other, since at any point in time one might become more/less scare than before.

3) The Treasury Department did not fully keep to the standard and opted for inflationary policy which when mixed w/ a hard asset standard creates booms/busts/bank panics/etc


The easiest way to fix this is to keep the current system and institute a "as perfect as possible" system to run alongside the current inflationary system. There is no reason Gold/Silver could not be used for large/commercial transactions and even personal savings, if that was the choice of the parties involved.

[DeadheadForPaul]

Ummm, yes he does want to abolish the Fed, hes even writen and introduced legislation (largely ignored legislation) to do just that. And, thats a very good thing. The Fed is nothing but a criminal empire, a cartel. Now, that said, he's also stated that he would allow private mints to coin money legally. See, right now they can sell bullion, but they can't call it legal tender. Allowing them to call it legal tender would allow it to compete with the Fed. Then he would phase out the Fed. As for whether or not he would be interested in a government controlled fiat currency such as the green-backs, well I doubt it, but you would have to ask him.

The largest problem with fiat currencies and even with asset backed currencies is lending out more than you actually have, a.k.a. frational reserve banking. Its the notion that I have 1 oz. of pure .999 gold, you ask me for a loan of 10 oz. of gold, so I write you a receipt for 10 oz. showing that you have 10 oz. of gold available to you from me. Except I only have 1. Then I charge you 1 oz. interest so you have to pay me back 11 oz. of gold. Now I have 12 oz. of gold made from just 1 oz.. This also applies to fiat currency and is what is really happening when you get a loan from a bank, however, its not gold they are faking. Its just paper. Money contrived from nothing.

Now, I know some videos say asset backed currency are bad and others say fiat is bad etc... Think critically about it. 1) if you take fractional reserve banking out of the equation by making its practice illegal, perhaps even constitutionally illegal, then you lose one of the major drawbacks to asset-backed currency. 2) gold and silver have intrinsic lasting value. 3) Paper does too, however, paper is worth quite alot less than gold and silver, intrinsicly speaking. 4) Some say that there isn't enough gold and silver for everyone - not true, but you would have to see that to believe it which Dr. Paul's method of weening you off paper would allow.

Honestly, why on earth people keep thinking paper is so much better than gold confounds me, but you would have the ability to see it for yourself. The Fed on the other hand has very little to do with the argument of paper or gold. The Fed, no matter what they back the money with, is criminal in nature and should most certainly be stopped. Frational reserve banking, excessive printing, and now not even reporting M3. The dollar will be unacceptable world-wide before you know it. Infact Iran has already rejected it.


I don't have a source for this, so I'll plead ignorance, but I swear that I heard him say that he did not want to get rid of the FED in one of his recent campaign speeches. It was either from the Google event, the Chronicle interview, or the rally in Cali

[ecliptic]

http://img408.imageshack.us/img408/5370/7894bss5.png (http://www.safehaven.com/showarticle.cfm?id=7894)

http://img294.imageshack.us/img294/8137/usdlongtermchartbl5.png (http://www.safehaven.com/article-7963.htm)

Bad news... if the dollar drops below 78 a sell-off could lead to very bad things...

[austin356]

Wait, and I apologize for seeming ignorant of this, but Greenspan actually advocated a return to the gold standard? Or was this before he joined the Fed?



Yes he was a gold supporter before going to the Fed. He has even made some comments regarding gold w/ the last ten years, not necessarily advocating gold standard but talking about its benefits.

[Wyurm]

I don't have a source for this, so I'll plead ignorance, but I swear that I heard him say that he did not want to get rid of the FED in one of his recent campaign speeches. It was either from the Google event, the Chronicle interview, or the rally in Cali

http://www.govtrack.us/congress/bill.xpd?bill=h110-2755

Thats the legislation that he recently introduced. As you can see, he has introduced it before and it ends up just dying. I've written pelosi and asked her to please move forward with it. However, I doubt anything will happen this time either, most of the congressmen / women don't even seem to understand how it works.

[austin356]

I don't have a source for this, so I'll plead ignorance, but I swear that I heard him say that he did not want to get rid of the FED in one of his recent campaign speeches. It was either from the Google event, the Chronicle interview, or the rally in Cali



You are right. But I think he was talking in the Context of " just come in and turn it off".

[Misesian]

Ecliptic,

Those charts are very interesting. Do you know how they are able to get the M3 statistic even though the Fed no longer reports this?!?!?!

"The Fed not reporting M3 is like GM not reporting how many cars they produce".

[DeadheadForPaul]

Ecliptic, Can you tell me what the Y Axis represents in the bottom graph? I assume that is has to do with the strength of the dollar...but what is that measured in Appreciate it

[Wyurm]

Ecliptic,

Those charts are very interesting. Do you know how they are able to get the M3 statistic even though the Fed no longer reports this?!?!?!

"The Fed not reporting M3 is like GM not reporting how many cars they produce".

Yeah, I was wondering this too, I noticed the M3 after they stopped reporting was a dashed line, but how did they get that info Ecliptic?

[Bradley in DC]

Wait, and I apologize for seeming ignorant of this, but Greenspan actually advocated a return to the gold standard? Or was this before he joined the Fed?

Hi Wyurm,

Yes. Reagan picked Greenspan for that reason. For many, many years (until his last few), Greenspan repeatedly advocated the same including before Congress:

http://www.usagold.com/gildedopinion/greenspan-gold.html

More info on many banking topics here (no longer a publicly advertised link and not updated after I left, unfortunately):

http://www.house.gov/paul/committeework/bankingtrans/welcome.htm

and good resource here:

http://www.fame.org/ReadingList.asp

especially Greenspan's classic here:

http://www.usagold.com/gildedopinion/greenspan.html

Best,
Bradley

[Bradley in DC]

I don't have a source for this, so I'll plead ignorance, but I swear that I heard him say that he did not want to get rid of the FED in one of his recent campaign speeches. It was either from the Google event, the Chronicle interview, or the rally in Cali

Yes, we want to abolish the Fed:

http://thomas.loc.gov/cgi-bin/bdquery/D?d110:38:./temp/~bdDVuq::|/bss/d110query.html|

[ecliptic]

Ecliptic, Can you tell me what the Y Axis represents in the bottom graph? I assume that is has to do with the strength of the dollar...but what is that measured in Appreciate it

If you click the image it links to an article on Safehaven.com - the y-axis represents the USD Index ( end of day ). Not exactly sure about the basis though it seems to correlate to the exchange rate against the Euro?

Excellent info on the USD Index and global monetary expansion:

http://www.gold-eagle.com/editorials_05/petch082505.html

Edit:

{ The US Dollar Index (USDX) is a number that measures the value of a dollar relative to a base of 100. It is a geometric weighted average of a collection of foreign currencies relative to the dollar, namely Euro (EUR), Japanese Yen (JPY), British Pound(GBP), Canadian Dollar (CAD), Swedish Kroner (SEK) and Swiss Franc (CHF).
It was started in March 1973, soon after the dismantling of the Bretton Woods system. At that time, the value of the dollar index is considered to be 100.000. As of now, in June 2007, the dollar index is in the low eighties. This implies that the dollar is considerably weaker compared to other currencies in the collection, than what it was in 1973. This number is updated 24 hours a day, 7 days a week.

From Wikipedia }

[SWATH]

The flaw in the gold standard is that the Fed bankers have already bought up the gold thru their counterfeiting scheme. Going to a gold standard would only make the thieves more powerful.

I expect he would back it by something that is fairly rare, like Gold, that the US could get the majority of it to hold as a reserve against the paper money.

Yes that is the problem. Money Masters warns against this for this very reason. We immediately switch to gold standard only to discover we have no gold. Most of the nations gold is gone and in the hands of other nations and bankers. I guess we would have to have a plan to buy it all back. I think Ron Paul knows what he is doing and if instantly switching to a gold standard would make us vulnerable to gold manipulation then he would not do it.

[Bradley in DC]

Yes that is the problem. Money Masters warns against this for this very reason. We immediately switch to gold standard only to discover we have no gold. Most of the nations gold is gone and in the hands of other nations and bankers. I guess we would have to have a plan to buy it all back. I think Ron Paul knows what he is doing and if instantly switching to a gold standard would make us vulnerable to gold manipulation then he would not do it.

The goals of the Money Masters are not ours, and it's full of historical inaccuracies.

[mesler]

Wait, and I apologize for seeming ignorant of this, but Greenspan actually advocated a return to the gold standard? Or was this before he joined the Fed?

Greenspan wrote a paper in the 60s advocating a gold-backed currency. Very powerful paper. Google for Greenspan Gold and you'll find it.

He has been quoted recently as saying that unlike his colleagues, he is nostalgic about the gold standard.

[ecliptic]

... Most of the nations gold is gone and in the hands of other nations and bankers.

Interesting side note:

• ~ 400 Billion dollars in Gold Bullion "disappeared" underneath the WTC complex on September 11th.

• At approximately 4 am an unusual seismic reading was registered...

• The disaster area remained extremely hot for six weeks after the buildings imploded - rescue workers were stunned to find molten steel at the bottom of the pile weeks afterwards....

Now having thought about the possibilities that this information imply, watch "Die Hard with a Vengeance" again paying very close attention to scenes in which the World Trade Center towers appear in the background...

Try to find an old copy of the film as one of the most obvious references is strangely missing from newer copies of this movie...

[specsaregood]

I'll just add one sidenote. If you look at Ron Paul's personal investments off his filings; it is another example of practicing what he preaches. The man is invested in hard assets via stocks/funds. I was happy to find that we shared a few investments.

[Quantumystic]

I don't get where this whole gold and silver are the only Constitutional forms of money comes from.

It's not correct.

The individual States are limited to only gold and silver, but the Union itself can make whatever it wants into money.

Article I, Section 10 states:

"...make any Thing but gold and silver Coin a Tender in Payment of Debts..."

If the States cannot Constitutionally "make anthing but silver or gold a tender in payment of debts", then it logically stands that IF the federal government issues anything other than silver or gold... then the States cannot legally accept it.

Making it worthless in the States.

Kinda like fiat currency.

[torchbearer]

After the disaster of the Continental... why would the founders leave it open for the central federal government to repeat the mistake of another fiat currency?

[MEBuckeye]

For LibertyEagle and anyone else who is interested, RP's book freedom Under Seige gives a great overview of our monetary policy and RP's views on the matter. The book is actually online in pdf format with RP's permission. The whole book is a great read but if you're are looking for a quick answer, skip to Ch4 Sound Money is Gold.

http://dailypaul.com/node/23

[Quantumystic]

If we revisit the Roman thinking, Salt was a measure of payment. Not for it's true "rarity"... but for its practical usage.

A modern equivilant might be industrial grade purity Silicon. Or Carbon-Diamond powder.

The new technology is of more inherent value than gold or silver is today. As information and energy techs continue to evolve, these 2 abundant elements, in their various refined forms, will grow as the building blocks of the future.

Another potential, more contraversial, would be "heavy water" (deuterium, tritium).

[David Merrill]

Stated at 25:30 in the recent Google interview:
http://www.youtube.com/watch?v=yCM_wQy4YVg

He does of course want "hard assets" to back the dollar to not have a fiat currency. Dr. Paul also acknowledges that the Constitution says only gold or silver are legal, presumable he would want to change that.

Just wanted to point this out it doesn't seem clear at times.


The courts rule rightly during the emergency:

http://friends-n-family-research.info/FFR/Merrill_public_money_case_1.jpg
http://friends-n-family-research.info/FFR/Merrill_public_money_case_2.jpg




Regards,

David Merrill.

[Misesian]

After the disaster of the Continental... why would the founders leave it open for the central federal government to repeat the mistake of another fiat currency?

Probably the same reason that the "General Welfare", "Commerce", and "All things necessary and Proper" clauses exist in there. Those darn federalists.

[Avalon]

After the disaster of the Continental... why would the founders leave it open for the central federal government to repeat the mistake of another fiat currency?

How was the Continental a mistake? Without it, the war could only have been funded via high interest loans from either the wealthy or foreign countries. Instead, the supporters got shafted but at least they got the republic they wanted.

[Misesian]

How was the Continental a mistake? Without it, the war could only have been funded via high interest loans from either the wealthy or foreign countries. Instead, the supporters got shafted but at least they got the republic they wanted.

Ever hear of the saying "not worth a continental"? It was simply created out of thin air, and highly inflated.

[Misesian]

If we revisit the Roman thinking, Salt was a measure of payment. Not for it's true "rarity"... but for its practical usage.

A modern equivilant might be industrial grade purity Silicon. Or Carbon-Diamond powder.

The new technology is of more inherent value than gold or silver is today. As information and energy techs continue to evolve, these 2 abundant elements, in their various refined forms, will grow as the building blocks of the future.

Another potential, more contraversial, would be "heavy water" (deuterium, tritium).

Quantumystic,

The problem is that silicon is highly inflationary, as silver is even compared to Gold. There is still plenty of industrial usage for Gold but that fact is actually irrelevant when it is used as currency.

I'd be all for private currencies. This is yet another thing that the market would work out, as it does everything else, and in the end Gold would be once again be the medium of exchange for goods and services.

We really don't have to wait. Places like www.goldmoney.com are essentially privatized currency and some places even except this directly for payments. If you're a business owner you should look into accepting goldgrams as payments. They have 100% reserves for all their gold.

[Broadlighter]

After seeing "The Money Masters" I would agree with some here that we ought to make the practice of Fractional Reserve Banking illegal, punishable by stiff criminal penalties.

The problem I am wrestling with is whether a commodity based currency or a fiat based currency (either without FRB) works better than the other. In times of national emergency or war, governments have been known to confiscate wealth.

Gold standard by itself is not immune to FRB practices and Gold was confiscated during the Great Depression.

How would it work if we used a fiat system based on reported assets by individuals and produced assets reported by businesses? I guess it wouldn't be a true fiat system since the currency in circulation would represent the wealth of a community. BTW, I only see this working on a small local level as in a county, but not necessarily on a national scale.

[Gee]

After the disaster of the Continental... why would the founders leave it open for the central federal government to repeat the mistake of another fiat currency?
They didn't. They specifically removed the ability for congress to create "bank notes" or "bills of credit". Notice congress only has the power to "COIN money".

The "necissary and proper" clause is, well, utterly necissary for the congress to be able to do anything. The "general welfare" clause was never intended to actually be a power in and of itself, it was simply supposed to be the purpose of taxation to "pay the debts and provide for the common defense and general welfare" (notice the lack of the word "offense"). I'll agree than the commerce clause grants too much power.

[Misesian]

After seeing "The Money Masters" I would agree with some here that we ought to make the practice of Fractional Reserve Banking illegal, punishable by stiff criminal penalties.

The problem I am wrestling with is whether a commodity based currency or a fiat based currency (either without FRB) works better than the other. In times of national emergency or war, governments have been known to confiscate wealth.

Gold standard by itself is not immune to FRB practices and Gold was confiscated during the Great Depression.

How would it work if we used a fiat system based on reported assets by individuals and produced assets reported by businesses? I guess it wouldn't be a true fiat system since the currency in circulation would represent the wealth of a community. BTW, I only see this working on a small local level as in a county, but not necessarily on a national scale.

Broadlighter,

Read Rothbard's pieces on monetary policy. There is absolutely no way you would even consider a fiat currency after learning about Rothbardian MP.

You simply cannot have a fiat based currency, and expect that the controllers of the money supply are not going to just PRINT more money. It's a hypothetical type of MP that theoretically could work but the economics doesn't take into account the evil brought forth by politicians who WILL inflate the money supply. We need to learn from history once and for all. This is the folly of the Chicago school in advocating the 100% reserves fiat currency as opposed to one fully backed by Gold. Also the total supply of gold does not matter. The dollar would be defined by x amount of ounces of gold.

[David Merrill]

Broadlighter,

Read Rothbard's pieces on monetary policy. There is absolutely no way you would even consider a fiat currency after learning about Rothbardian MP.

You simply cannot have a fiat based currency, and expect that the controllers of the money supply are not going to just PRINT more money. It's a hypothetical type of MP that theoretically could work but the economics doesn't take into account the evil brought forth by politicians who WILL inflate the money supply. We need to learn from history once and for all. This is the folly of the Chicago school in advocating the 100% reserves fiat currency as opposed to one fully backed by Gold. Also the total supply of gold does not matter. The dollar would be defined by x amount of ounces of gold.



The fractionalizing is done upon your endorsement.

http://Friends-n-Family-Research.info/FFR/Merrill_Story_of_Money.zip

Unconvinced? You MoneyMaster entheuseists; just ask yourselves why there was no fiat currency between 1789 and 1861?




Regards,

David Merrill.

[ecliptic]

... Do you know how they are able to get the M3 statistic even though the Fed no longer reports this?!?!?!

Global Exodus from the US Dollar in Motion (http://www.sirchartsalot.com/article.php?id=61)
by Gary Dorsch

"Trading in the arcane world of foreign exchange is often akin to judging a reverse beauty contest. The trick to profitable trading is to pick the least ugly currency. Nearly all fiat or paper currencies are ugly, because the 18 of the world's top-20 central banks are inflating the money supply at double digit rates. At the moment, the world's two ugliest currencies are the Japanese yen and the US dollar.

The Bank of Japan pegs its overnight loan rate at just 0.50%, in a brazen effort to devalue the yen, to boost exports abroad, and prevent an abrupt unwinding of the mushrooming "yen carry" trade.

Meanwhile the Federal Reserve is inflating its M3 money supply at a 13.7% annualized clip, according to private economists, which if correct, would be the fastest rate of expansion in more than 30-years.

US Treasury chief Henry Paulson, and former chairman of Goldman Sachs, GS.N, "monitors the financial markets closely," and has reinvigorated the infamous "Plunge Protection Team," which comes to the rescue of the US stock market whenever nasty revelations come to the surface. At the moment, Paulson's grand strategy is to offset losses in the US housing sector with big gains in the stock market, to prevent the US economy from sliding into recession."

Mr Dorsch worked on the trading floor of the Chicago Mercantile Exchange for nine years as the chief Financial Futures Analyst for three clearing firms, Oppenheimer Rouse Futures Inc, GH Miller and Company, and a commodity fund at the LNS Financial Group.

As a transactional broker for Charles Schwab's Global Investment Services department, Mr Dorsch handled thousands of customer trades in 45 stock exchanges around the world, including Australia, Canada, Japan, Hong Kong, the Euro zone, London, Toronto, South Africa, Mexico, and New Zealand, and Canadian oil trusts, ADR's and Exchange Traded Funds.

He wrote a weekly newsletter from 2000 thru September 2005 called, "Foreign Currency Trends" for Charles Schwab's Global Investment department, featuring inter-market technical analysis, to understand the dynamic inter-relationships between the foreign exchange, global bond and stock markets, and key industrial commodities.

[Harry96]

(I apologize if someone already posted something similar to the following; I just skimmed this thread.)

I'm not an expert on any of this, but my understanding is when Dr. Paul talks about legalizing competition for the Fed, he wants to keep it operating exactly as it is in the short term, except to repeal all of the laws and regulations against competition so that existing and new banks, for example, can choose not to participate and to allow free market, stable currencies to evolve in the marketplace.

That makes perfect sense. If he became president and quickly announced that he was pushing Congress to abolish the Fed, among other things, there would probably be a panic and revolt from the people because they wouldn't understand what's happening to them; very few average people understand what the Fed is, why it's there or what it does, and it's human nature to fear the unknown, especially when it's about something so vital as their livelihood.

But if he briefly explained the history of the Fed, etc. and explained why he dislikes it, but then explained that he's merely legalizing competition for Fed notes, but that no one has anything to fear, because if they don't want to quit using them for some reason, they'll still be there, just like they always have been, I think that would minimize the public's anger, fear and confusion.

What I then envision happening within a short time is the market would solidify one free market dollar value, whether denominated in gold, silver or something else, and merchandise would have two prices: one for Fed dollars and one for dollars backed by gold (or whatever evolved as the best commodity for money through competition and people's voluntary choices).

That would put inflation right out in front of everyone for them to see in their everyday lives; they wouldn't have to read Austrian economics to understand that they're being robbed. They would see, for example, that when free market dollars first emerged, a certain item they buy cost five Fed dollars and five market dollars, but, say, a year later, the number of market dollars it takes to buy the item is the same or even less, but the number of Fed dollars to buy it has gone up to seven. Under such a system, the demand for Fed dollars would probably die out within five years and the Fed would collapse on its own from lack of support.

[Bradley in DC]

No, we will abolish the Fed.

[AdamT]

It seems like silver is a better option than gold to back the currency. Check out The Money Masters (http://video.google.com/videoplay?docid=-515319560256183936) on Google Video. Fiat Empire (http://video.google.com/videoplay?docid=5232639329002339531) is excellent as well.

[LibertyEagle]

Why does everyone keep pushing The Money Masters? William Still loves Fiat currency. If you want a good video on the Federal Reserve that is much more aligned with Dr. Paul's beliefs, watch this one put out by the Ludwig von Mises Institute:

Money, Banking and the Federal Reserve

http://video.google.com/videoplay?docid=-466210540567002553&q=%22federal+reserve%22&total=1121&start=0&num=10&so=0&type=search&plindex=0

[Johnnybags]

Although inflation lags behind a bit, 13.7 - say a 5 percent raise = 8+ percent loss of buying power. We all know its happening and the only reason to inflate is to steal buying power. The elite investor class wins and John Q loses. Milk 4.00, Gas 3.15, groceries soaring, congress asks for 6k raise which is about the raise you need to keep even. All issues are dealt with not by decreasing spending but paying for mistakes by passing on the cost to all goods and services. Just wait til they bail out the banks subprime woes with more fiat dollars. In Mass we are taking a 250 million bond to to help out with adjustable rate mtg increases? Is that the role of government? I doubt it. Saddle the taxpayer with interest payments for private transactions? Sickening.

[Bradley in DC]

Why does everyone keep pushing The Money Masters? William Still loves Fiat currency. If you want a good video on the Federal Reserve that is much more aligned with Dr. Paul's beliefs, watch this one put out by the Ludwig von Mises Institute:

Money, Banking and the Federal Reserve

http://video.google.com/videoplay?docid=-466210540567002553&q=%22federal+reserve%22&total=1121&start=0&num=10&so=0&type=search&plindex=0

Thanks. Beat me to it. We welcome the followers of The Money Masters similar to the 911 Truthers: to the extent they support Dr. Paul's agenda (no Fed, open and transparent government), great--but they have to understand that we are not part of their movement.

[Man from La Mancha]

Why does everyone keep pushing The Money Masters? William Still loves Fiat currency. If you want a good video on the Federal Reserve that is much more aligned with Dr. Paul's beliefs, watch this one put out by the Ludwig von Mises Institute:

Money, Banking and the Federal Reserve

http://video.google.com/videoplay?docid=-466210540567002553&q=%22federal+reserve%22&total=1121&start=0&num=10&so=0&type=search&plindex=0


I have to agree in the fact it is shorter and does a very good job. The money masters has more history and more references and pictures. But if I wanted to introduce someone to the money problem and who doesn't have alot of time, Fiat currency is the way to go,

[Bradley in DC]

Dr. Paul's books on money:

Gold, Peace, and Prosperity: The Birth of a New Currency
http://www.mises.org/books/goldpeace.pdf

The Case for Gold: A Minority Report of the U.S. Gold Commission
http://www.mises.org/books/caseforgold.pdf

[David Merrill]

No, we will abolish the Fed.

The remedy from elastic currency has been in place as long as the elastic currency (1913).

Ron's attempts to abolish the Fed flop miserably and as President, he is not really supposed to be legislating anyway. So we had best learn how to non-endorse private credit from the Fed ourselves - redeeming lawful money.



Regards,

David Merrill.

[thomasw78]

I've read all the posts in this thread and here's my question about the gold standard and commodity-backed currencies:

What do we do in times of war?

Surely you would concede even as libertarians and non-inteventionists that some wars are necessary. Even Dr. Paul doesn't endorse a no-war policy. So how would the United States, being on a gold standard or a commodity-backed currency, compete with a country that was borrowing money to fund their war effort? Would you be in favor of suspending the commodity backing during the war? I'm not trying to attack the idea of commodity-backed currencies but I am genuinely curious.

[Misesian]

Thomas,

Out of the handful of Declared Wars how many of them were "necessary" to preserve the sovereignty of the United States as well as our individual liberty?

You simply NEVER let government suspend commodity backed currency. It's actually even redundant to refer to it as commodity-backed because this is what currency inherently, and historically is. It is something of worth, you cannot suspend this just like you cannot suspend habeas corpus, liberty, private property rights, etc. in the name of "war".

If you are really in need of defending your homeland from foreign invasion than the militia would be called to arms and aide the military in defending the nation. Remember, YOU, as an arms-bearer, are part of the militia. Suspending rights is not necessary for you to defend your own.

[Bradley in DC]

I've read all the posts in this thread and here's my question about the gold standard and commodity-backed currencies:

What do we do in times of war?

Surely you would concede even as libertarians and non-inteventionists that some wars are necessary. Even Dr. Paul doesn't endorse a no-war policy. So how would the United States, being on a gold standard or a commodity-backed currency, compete with a country that was borrowing money to fund their war effort? Would you be in favor of suspending the commodity backing during the war? I'm not trying to attack the idea of commodity-backed currencies but I am genuinely curious.

If absolutely necessary: pay for it and borrow the rest (war bonds)

[Misesian]

If absolutely necessary: pay for it and borrow the rest (war bonds)

That too, but the definition of "absolutely necessary" is going to be quite different between the statists and the libertarians. I'd rather see the usage of the militia to supplement the needs of military rather than borrowing the money to increase the size of government.

[Mesogen]

I wish people would just recognize the real problem, fractional reserve banking. This was standard practice even under the old gold standard, even before the Federal Reserve.

This is the vehicle for tons of debt (called credit) and inflation (called growth).

When banks can create money from nothing and lend it to people who then owe them interest on it, it drives down the value of everyone else's money.

Mortgages are the worst. If you take out a 30 year mortgage for $200,000, the bank only needs to have $20,000 in reserves to cover the loan (using a 9:1 reserve ratio). It will create $180,000 out of "thin air" and receive a total of >$400,000 in payments (at 6% apr), including over $200,000 in interest. So for the bank's risk of $20,000, which it didn't really risk, it receives >$400,000. Pretty sweet way to 'make' money.

Whether there is a gold standard or not, this is the problem. It's especially a problem when the government can just borrow all the money it needs from the Federal Reserve, which creates money out of 'thin air' for the loan.

With that said, if fractional reserve banking were limited to the private sector, it wouldn't be so bad. The money would essentially be backed by assets (collateral) that were purchased with the loans. The real problem comes when the government borrows money from the Federal Reserve. This money is backed by the ability of the government to tax its citizens. It's not backed by assets at all.

[Mesogen]

People are talking about the Continental, but what about Colonial Scrip?

What was the difference in these two currencies? Why was one a disaster and the other highly successful?

[Misesian]

Mesogen,

That's right, Fractional Reserve banking is the big problem, however fractional reserve is only a give in if you have a fiat currency.

I would prefer private currencies which seem to be reappearing now to compete with the Fed such as goldmoney.com and the liberty dollar. All backed by specie of course.

[Mesogen]

Mesogen,

That's right, Fractional Reserve banking is the big problem, however fractional reserve is only a give in if you have a fiat currency.

I would prefer private currencies which seem to be reappearing now to compete with the Fed such as goldmoney.com and the liberty dollar. All backed by specie of course.

But wasn't fractional reserve banking in practice for a long long time, even with gold standards and the like?

I don't really see how they pulled it off if the dollar was pegged to an amount of gold, so maybe I'm not getting something.

[Bradley in DC]

The remedy from elastic currency has been in place as long as the elastic currency (1913).

Ron's attempts to abolish the Fed flop miserably and as President, he is not really supposed to be legislating anyway. So we had best learn how to non-endorse private credit from the Fed ourselves - redeeming lawful money.



Regards,

David Merrill.

Hi David,

Dr. Paul's legislation to abolish the Fed each term is more for educational purposes, which, unfortunately, has been the best approach. We are aware of that and have more practical, slower plans to put in place if climate changes (say, someone new in the Oval Office).

[Bradley in DC]

That too, but the definition of "absolutely necessary" is going to be quite different between the statists and the libertarians. I'd rather see the usage of the militia to supplement the needs of military rather than borrowing the money to increase the size of government.

Agreed to a degree: personally, I'd rather see the armed militia and officer corps instead of a standing army.

http://www.law.ucla.edu/volokh/beararms/testimon.htm

[Bradley in DC]

Fractional Reserve banking is only a give in if you have a fiat currency.

Um, the Middle Ages goldsmiths might disagree.

[WannaBfree]

I don't have a source for this, so I'll plead ignorance, but I swear that I heard him say that he did not want to get rid of the FED in one of his recent campaign speeches. It was either from the Google event, the Chronicle interview, or the rally in Cali

"I want a different monetary policy but I don't advocate closing down the Federal Reserve." - Ron Paul

Weird statement from him but he did say it on July 13th in San Francisco. It's at around -22:00 on the counter.

http://www.sfgate.com/cgi-bin/blogs/sfgate/detail?blogid=42&entry_id=18531

[JosephTheLibertarian]

"I want a different monetary policy but I don't advocate closing down the Federal Reserve."

Weird statement from him but he did say it on July 13th in San Francisco. It's at around -22:00 on the counter.

http://www.sfgate.com/cgi-bin/blogs/sfgate/detail?blogid=42&entry_id=18531

no.. he doesn't want to shut it down overnight...eventually, yes

[Misesian]

But wasn't fractional reserve banking in practice for a long long time, even with gold standards and the like?

I don't really see how they pulled it off if the dollar was pegged to an amount of gold, so maybe I'm not getting something.

Mesogen,

Sure fractional reserve banking was in practice for a long time because we essentially did not have a 100% backed Gold dollar such as which Rothbard would advocate, as does Paul.

We have to understand that the nature of fractional reserve banking is essentially embezzlement. It stems from an old ruling in England that did NOT establish banking as a bailment. Wherein you are able to bring in your warehouse receipt to redeem your own personal property such as you would in any other storage center and even a grain elevator.

The Money Masters essentially advocated a fiat currency that's of 100% reserves. The problem is that with a fiat currency the temptation for government to inflate the supply has historically always been irresistible. It is also not backed by anything of value so it's also easier to issue the fake warehouse receipts (on credit) for the fiat notes that do not even exist. Remember there was a large campaign that DISCOURAGED individuals from exercising their rights to claim their private property from the banks.

We have to learn from our mistakes.

There are a number of excellent books on this matter that have been authored by one of Ron Paul's closest colleagues of the Austrian School being the late Murray Rothbard.

Go to www.mises.org/store and search is collection for books on the 100% Gold Dollar and The Case Against the Fed.

You can even read The Case for the 100% Gold Dollar on the web or download/print it from the PDF: http://www.mises.org/story/1829

[Misesian]

no.. he doesn't want to shut it down overnight...eventually, yes

I think he does, and I have verified that clip if he said it or not, but there are still plenty of sheeple out there (I'd say the vast majority) who think that our economy DEPENDS on the Federal Reserve system, even though they have no clue how it works. Just like how they think our economy relies on the INCOME TAX too.

It was MEANT that at this point in time Ron Paul would be running for the presidency. I believe he is going to win but even if he does not win the Presidency he would have still won by this immense spreading of the liberty message, and a return to laissez faire.